D.T. Consultants focuses on the criteria for attaining Qualifying Free Zone Person status in various jurisdictions in the context of global business and corporate tax regulations.

Under the global corporate tax guidelines, Qualifying Free Zone Persons can benefit from a preferential 9% corporate tax rate on their Qualifying Income.

To do so, they need to fulfil the following conditions:

• Generating Qualifying Income

• Establishing a substantial presence within the designated free zone

• Ensuring that non-qualifying revenues remain below specified de-minimis thresholds

• Adhering to the Transfer Pricing documentation and Arm’s Length Principle

• Compiling audited Financial Statements as per local laws

• Fulfilling any additional conditions that the relevant authorities need

It is essential to fulfil all these conditions right from the outset since non-compliance with one or more of these conditions may deprive you of your tax benefits. The consequences of non-compliance apply for the current financial year along with the upcoming four years, even if you meet all the conditions afterwards.

Key points

With the calendar year 2023 approaching to an end, businesses operating within free zones, with their initial tax periods commencing on or after January 1, 2024, should prioritize evaluating their operations to be eligible for the preferential corporate tax regime (i.e., a 9% corporate tax rate) as applicable.

To ensure that the business meets all the conditions from the very beginning, it is a priority to carry out strategic planning and an early assessment. The implementation of any restructuring, resource allocation, adjust processes, or evaluate potential benefits is considered time consuming.

To ensure compliance from the first day, certain steps may be more urgent or important compared to others. Taking timely action after identifying those steps holds the key to enjoying the 9% benefit.

Disclaimer

Our team of experts is dedicated to navigating the complex world of global tax regulations. We provide comprehensive support throughout your compliance journey. You can contact one of our specialists by clicking here. We are always at your disposal and eager to help you.